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May 2009 Archive for Out to Pasture

RSS By: Steve Cornett, Beef Today

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Big Packers Face Obamanomics

May 20, 2009

By Steve Cornett
 

If you think packers are too big and powerful, you probably will like USDA's new beef sheriff. J. Dudley Butler is an anti-corporate activist and a trial lawyer and just what the folks we used to call "outsiders" were hoping for with the Obama administration.

For instance, when the folks at R-CALF approved the resolution below, few outside the organization noticed. The chances of getting such a program pushed from the Bush Administration were just about equal to the odds of finding a high Choice Longhorn cow.

“Resolved: R-CALF USA adopt policy and aggressively pursue legislation that allows formula pricing contracts for slaughter cattle that only have a base price on the contract at the time of signing the contract. These contracts shall be available to any independent cattle producer.”

But then came November, and we asked for change. We’ve talked earlier about the possibilities of Obama’s “transitional administration” radically altering the environment of cattle production.

One of the ways that landscape could be altered would be by a new approach to anti-trust legislation. Few basic industries are as top-heavy as beef packing, and few have stirred as many enemies. So, as you consider the chances of “transformational change” in cattle markets, consider that new head of anti-trust enforcement—the folks who decide when to swing the government against big business—has promised to “reinvigorate” the Sherman Anti-Trust Act and broaden it to consider the way vertical integration serves as a barrier to entry.

In other words, the way supplier contracts might impact competition. Christine Varney, widely regarded as Obama's trust-buster to-be, seem to be talking more about technology companies, and cows ain't technogloy. But the theory probably holds.

Now factor in a new head cattle market cop who is an activist trial lawyer with a practice devoted largely to agricultural contracts. Fowl contracts, to be specific.

Because that’s exactly what the resume of J. Dudley Butler, the new head of the Grain Inspection, Packers and Stockyards Administration indicates he is. He was, recalls Fred Stokes, former president and current executive vice president of the Organization for Competitive Markets, among those at the OCM’s first meeting back in 1997.

In fact, Stokes and others credit Butler with a key role in getting Congress to do away with involuntary arbitration contracts in the poultry industry. Disgruntled growers had long complained about those contracts, arguing “integrators” use them to protect themselves from jury trials when the abuse the growers. (Trial lawyers didn’t like that “no trial” stuff much, either.)

This is going to be interesting. Butler is not a guy who, by reputation at least, seems to have little patience with mainstream agricultural business practices. Before his company Web site was taken down, his list of “agricultural links” included neither the National Cattlemen’s Beef Association nor the American Farm Bureau. OCM was there. As was R-CALF and a host of “sustainable” and “family” farm organizations.

It’s been years since most us paid much attention to GIPSA. The agency mostly tells rogue cattle buyers and broke auctions they must close barn doors after horses are out. And promise not to leave the doors open again.

It’s been years since the agency policy had much impact on the way we do business.

But overlay Mr. Butler’s politics onto the personality of a trial lawyer, and there may be reason Mr. Butler’s colleagues on the left side are so enthusiastic about his new job.

Randy Stevenson, current president and another founding member of OCM,says he expects to see Butler bring the “interests of producers” back into the picture. Stevenson says the Bushies at GIPSA were just there to protect packers from the Packers and Stockyards law.

He says it will take time for Butler to swing GIPSA’s bow, but he says Butler has the instincts to do it. Just how much change he can bring is Stevenson’s question.

Jess Peterson, executive vice president of the U.S. Cattlemen’s Association (another outfit not on the Butler Law Firm list of links) says he worked with Butler on several legislative efforts and says, “He is certainly on the side of the producer.”

Peterson predicts “a much more aggressive” approach to the P&S law in the years ahead.

I’d be surprised if that isn’t so. My concern is that Mr. Butler use all his new power to attack causes rather than symptoms. My concern with the approach of OCM and their fellows on that side of the argument is that they want to approach beef consolidation as if it were occurring in a vacuum. 

It’s not. The business model that developed in the poultry industry has put a price limit on protein at the same time it allows marketers to adjust production and producers to consumer demand.

At the same time, beef must move into a highly concentrated retail environment., an environment so non-competitive on the buying side that grocery chains typically charge marketers for the right to have them sell their stuff. 

There may be only four really important beef packers, but they aren’t getting rich selling beef. You might argue that they don’t pay as much as they could for cattle, but I’d bet you’ll agree they probably sell the stuff for all they can get. And their margins have been nothing to brag about the last few years.

If you think that 50 “independent” packers selling to those same few big markets would do better—pay more because they get more—I’ve got a pot load of high Choice Longhorns to sell you.

So, anyhow, there is my hope for this new situation. My concern is that we not further tie beef producers’ hands with a bunch of regulations treating symptoms.

Lawyer Butler seems to know something about the processor-grower relationship in the poultry business. If he wants to “save the little man,” I hope he’ll turn his attention there first. And I hope Ms.Varney, if she must, will consider the buyer power of those giant food chains before she starts telling us what kind of contracts we can write on the low end of this food chain.

I’m not a big fan of big business. I think they get as mired in bureaucracy and top-think as government. Still, I’m not sure concentration in the packing business is as much a problem as the OCM bunch thinks.

But I’m convinced that the worst possible scenario for the next few years is for the government to allow poultry to continue to operate their highly efficient business model while keeping beef in the strait jacket system that got us here.

If they insist on protecting every hobby farmer out there, they’ll turn us all into hobby farmers.

Click here to read rebuttals from R-CALF and OCM.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.
 

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.


 

 

Hey Limbaugh. Watch this.

May 15, 2009

By Steve Cornett

The Humane Society of the United States fund-raising spots are still on Rush Limbaugh’s Web site, so let’s suggest he look at this mighty fine report from an Atlanta TV station on just what it is they do with their money (click here to view report).

The report says they spent $112 million in 2007, the vast majority of it on their animal rights legislative agenda.

It’s a short video and I could watch in even on my mighty slow Internet satellite hookup. But it will show you why I’m so concerned about Mr. Limbaugh’s conversion to the left side on the issue.
 

He’s going to raise them a zillion bucks, and they’re going to use it to legislate animal agriculture out of business, and Mr. Limbaugh will have to give up his Allen Brothers steaks. He’s so right on so many issues, you’ve got to wonder why he is so not right on animal rights.

A scary story here. Very scary story here!

May 12, 2009

By Steve Cornett

The New York Times yesterday had a pretty darn balanced and well-contexted look at the state of food safety in the U.S.

You can see it at http://www.nytimes.com/2009/05/11/health/11food.html?ref=health.

Surprisingly for the Times, the story is not all about how bad food and agriculture is. In fact, it concedes—and I use the verb only because it’s the New York Times so I suppose they have to “concede” it—most public health experts “believe the nation’s food supply is markedly safer now than it was 100 years ago, and probably safer than a decade ago.”

I can’t imagine which “expert” worth the “pert” part wouldn’t believe the food supply was safer than it was 100 years ago. But I’m glad to see the Times admitting the experts think it’s safer than 10 years ago. Geez. The system is doing something right?

And then later, get this: 

“Since the CDC (Centers for Disease Control) began its improved tracking in 1996, cases tied to some major germs have decreased significantly. Authorities cite better oversight of the meat and poultry industry. (Emphasis added).

“Ailments caused by the toxic strain of Escherichia coli have dropped 25%. Campylobacter cases are down 32% and listeria cases, down 36%. A few relatively rare diseases have increased, and rates of salmonella, a common food-borne illness, are largely unchanged. (Most salmonella cases are mild.)” 

Now, to be frank, I might have chosen different words. I think HACCP, the industry’s overtime efforts and technological improvement have had more impact than government oversight. But let’s not quibble.

The authors of this article even managed to find somebody who got sick drinking raw milk despite the fact that it was organic raw milk produced, I presume, by a “family dairy farmer.” That’s just so un-PC to blame some family farmer for a problem, even though there’s not enough cash in most family farms to attract the attention of the trial lawyers and their publicity machines.

The writers go so far in this piece as to suggest that all the headlines about food safety might be the result not of less safe food but of better reporting.

Anytime I get into this subject of food safety, my brain caveats the whole thing by wondering if we are really making ourselves safer by protecting ourselves from every possible germ, knowing that we are fostering sissy-sissy-kissy-missy immune systems.

At any rate, in defense of the NYT, whose reporting I admire greatly and trust greatly on issues I don’t know anything about, I will note that this nuanced article is not on the Web site's list of most popular stories. It isn’t scary enough for folks to email around to each other, proving how interested they are.

On the other hand, Jane Brody’s very scary story on the "very not-scary-to-me-anyhow" National Cancer Institute report on red meat’s relationship to longevity among AARP oldsters was on the “most popular” list from April 27 until this morning.

Now, if you were a reporter whose job was to generate readership, would you rather write something scary that people email around or something more nuanced that people ignore?

Yes. Well, me too. But I didn’t have one this morning, so I just wrote a scary headline.
 

Update to the update on “Hey, Limbaugh”

May 08, 2009

By Steve Cornett

In an earlier update, we wondered why Rush Limbaugh is stonewalling on his support for the Humane Society of the United States.

One response accuses this reporter of not listening to Mr. Limbaugh, offering the challenge, “Listen, and then we can talk about where he stands on the issues.”

Of course I listen to Limbaugh, as does just about everybody I know. I listen and mostly I agree. His support of the animal rights agenda has lowered him in my opinion, and by a lot. No, wait. It’s not his support for the movement. It’s his failure to own up and explain why he thinks that way.

I was never sure he had the right to pass judgment on who is and who isn’t “conservative.” But a lot of my friends think he does, so if he thinks you have to send money to HSUS to be a “conservative,” I’d like for him to tell us straight out. I’ve got two “farm stations” I can listen to, and on one of them I don’t have to listen to animal rights hooey.

He’s off the reservation on this issue, and he knows it. He’s just not honest enough to fess up. Evidence: Not only has he not rescinded his support of the HSUS, he has not defended it. Not that I’ve heard on his station or heard about, anyhow, and I’ve been listening.

It’s not like he isn’t aware. I mean, if Limbaugh listens to any “drive-by media” it would be ESPN, and ESPN has taken note. You can read their take by clicking here.  

He knows by now what HSUS is about. He knows they want to stop animal agriculture and hunting and he knows they will use the dollars they raise from his endorsement to further those causes. They—he?—want to pass laws to put you out of business.
 
He should be man enough to tell us where he stands. 

I’d like to know if he believes I’m immoral for eating beef and shooting deer and quail, because HSUS does believe that.

I know what he’s up to here. He refuses to take calls on the issue on the air. I’ve seen him quoted nowhere on the matter. Farm director Chris Albracht at KGNC in Amarillo told me that if I want to contact Limbaugh I’ll have to subscribe to his Web site.

Limbaugh does not want to talk about this. He usually thrives on being called out. He loves it when Colin Powell calls him divisive. Devotes whole shows to stuff like that. It’s not that he’s soft-skinned. It’s that he knows he’s off his base’s base on this issue, and he’s not going to admit it. 

I’m sure some of our readers must be members of the Limbaugh website. Have any of you asked him whatzup? Has he replied?

If you haven’t asked, would you please? And report back? I don’t blame him for insulating himself from reporters, given the way they treat him, but in this case it would be nice if he’d let us know where he stands.

For the rest of us, we can learn more about how hunters and fishermen feel at http://ussportsmen.org/Page.aspx?pid=1972

Click here to read previous blog:

Update on "Hey, Limbaugh"

Update on "Hey, Limbaugh"

May 08, 2009

By Steve Cornett
 

 Here is what Rush Limbaugh must believe and want his dittoheads to believe:

“Factory farming—the intensive confinement of tens of thousands or even millions of animals in one place—has strong ties to the current strain of swine flu.”
 

It doesn’t sound much like him, but if you visit his website, one of the few free links you’ll find takes you to the Humane Society of the United States site, where that very paragraph jumps from the page first.
 

It’s bunk, of course. The 1918 flu epidemic, which killed millions, had the same sort of genesis as this one and there were no “factory farms” at the time. Lots of zoonotic diseases mutate and jump species, and they can come just as easily from non-agricultural species. Did you ever hear of AIDS?
 

I haven’t had a chance to listen to Limbaugh’s program since he endorsed the HSUS. I would have hoped their blatant effort to turn the publicity surrounding the flu formerly known as swine flu against hog farmers might have given him some pause.
 

I guess not. The HSUS link is still there on his website.
 

I can’t imagine he didn’t notice that they were trying to push their “animal welfare” agenda with the flu scare. I can’t imagine that a man with half a brain on loan from God wouldn’t recognize the sheer dishonesty of that and I rather suppose Limbaugh is too proud to admit his mistake.

Again, it’s not that any of us likes dog fighting. It’s that we know HSUS will use Limbaugh’s endorsement to raise money not to stop the vestiges of dog fighting in this country—they’ve probably got a million in the bank for every commercial dog and chicken fighter left—but to further their true agenda, which includes things like blaming flu epidemics on hog farmers.
 

That’s how they work. It’s hard to believe Limbaugh continues to endorse them and still appear on just about every ag radio station in mid-America with no kickback from the people whose lifestyles and livelihood are threatened by the HSUS-Limbaugh mindset.
 

           

 

Good News on Exports, We Hope

May 04, 2009

By Steve Cornett
 

Maybe we’ve been too worried about the future of beef trade. Both Europe and South Korea seem to be going our way at the moment.

We’ve visited before about how important the export market is and will be. You don’t have to read the New York Times every day to be aware that there is a lot of pressure on Americans to eat less beef.

You and I can argue with their logic all day, but so far we’ve done little to turn around the slide in domestic per capita beef consumption.

If we’re going to keep producing more beef with fewer cows, as we seem inclined to do, we’ve got to have growing markets. Population growth isn’t likely to keep up with increased production.

So it’s crucial that we keep and open new markets for beef. The way Candidate Obama sounded a year ago about trade, many of us were scared to death. Now, he seems to have opened his heart to open markets. That’s good, if it’s so and if he and his greenheaded friends don’t put too many restrictions on producers.

One reason for hope: The European Union seems to be giving U.S. trade authorities cause to believe they are serious about allowing more access.

That’s a big deal because we’ve been fighting the Europeans for two decades over the use of growth promotants. That has been a thorny argument because it gets right at the heart of the ability of two entities to agree on what constitutes “sound science” and how to agree on the difference between honest disagreements and “non tariff trade barriers.”

In this case, the U.S.—backed by the “judges” at the World Trade Organization—has long contended that growth promotants pose no threat to health. But the EU, which seems (to us, at least) to be paranoid about all things smacking of modern technology has refused to accept U.S. beef without assurances it was produced without synthetic hormones.

It’s easy for us to see a non-tariff trade barrier, but the Europeans don’t allow their own producers to use implants, either. Politically, they have bent to the will of public opinion and international science be damned.

Until recently, the U.S. has stood firm, demanding that all such trade decisions be based on “sound science.” Now, it seems the current administration has offered the EU an out. We get more access to more of the “hormone free” beef they are willing to accept. They get relief for the cheese farmers and other victims of the retaliatory tariffs the U.S. applies to chosen products we import from the EU.

At least that’s how it looks. I’m not sure it’s smart for the longterm, but it looks like our side has decided to forego that hard, fast “sound science” approach. The new Administration appears willing to deal. Short term, that’s great. It’s going to give us some immediate access.

The concern, of course, is that once you admit that “sound science” is more gray than black or white, you’ve left the door open to arbitrary “scientific barriers” erected at the behest of domestic protectionists.

For instance, folks like the instigators of last year’s anti-U.S. riots in South Korea. You’ll recall that when the government there finally relented to crack the doors to U.S. beef, a consortium of folks led by Korean beef producers staged noisy rallies that left the impression Korean consumers were scared to death of the stuff.

Now, a year later, South Korean consumers are eagerly snapping up U.S. beef and the producers of a TV documentary that fueled the uprising have been arrested and charged with “spreading false rumors” about U.S. beef.

As it turns out, the reluctance of Koreans to accept U.S. beef was a figment of the protectionists’ imagination. That’s good news for us, even if it’s bad news for high-cost Korean beef farmers.

It’s easy to poopoo the Koreans for allowing a vocal few to whipsaw the system, but we’ve got the same thing on our side, where out own beef’s protectionist arm approaches Canadian beef just about the same way the Korean protectionists attacked U.S. beef. Their arguments are nearly identical—sound science may well indicate the threat of BSE from “their country” is infinitesimal but infinitesimal is still too much.

Once you decide to deal and compromise the principle of sound science, you give folks with non-scientific agendas a lot more power. In both Europe and Korea, we’ve allowed the ends to justify the means. I hope it works out for us and for them as well.

Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at scornett@farmjournal.com.

This column is part of the Beef Today Cattle Drive e-newsletter, which is delivered to subscribers biweekly and includes beef industry analysis, market information as well as the latest beef headline news. Click here to subscribe.


 

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